FOOL SCHOOL
Buying A Used Car

November 22, 2002

The supply of secondhand cars is almost endless. You can get them from franchised or independent dealers, car supermarkets, car brokers, private sellers and also from car auctions. Franchised dealers tend to offer excellent cars but you will be paying the top price for that privilege. Independent dealers will be more willing to negotiate but the cars may not be in such good condition.

Car supermarkets can be a great place to visit when you are unsure of the car that you want to buy. The marketing idea here is to "pile 'em high and sell 'em cheap". Car brokers will use their contacts to get you a great deal on a secondhand car. They have contacts with many dealers and auction houses. They also have an in-depth knowledge that can enable them to get a car at a price that you can only dream of. Often they will work on a fixed fee rather than on a percentage of the sales price.

Private sellers tend to offer some of the best deals around but you have little redress if something goes wrong. Finally car auctions can be great fun. But it is important that you always read the Conditions of Sale for the auction. These outline your rights when buying a car.

Used Car Checklist

• Always check out vehicle title, write-offs and outstanding finance on a car that you are considering buying. Call HPI Ltd (telephone: 01722 422422), or the AA (telephone: 0800 234999).

• When you go to see the car, always ask to see the car's documents (DVLA Form V5, Vehicle Registration Document), and check to see if the documentation has a watermark. Make sure the car is registered to the person you are visiting, at that address. Ask to see the service book, and check the details -- people can easily fake these. If in doubt phone the garage, or better still, avoid the car!

• Always check that the registration number and VIN (Vehicle Identification Number) correspond to the car. The VIN is stamped on a metal plate by the engine, and under the carpet by the driver's door. If the numbers don't match, or they look like they have been tampered with, run a mile!

• All cars over 3 years old must have a valid MOT certificate. This will record the mileage when the test was carried out; check this against the car's milometer. Cars can easily be "clocked", so look out for the signs: these include misaligned numbers on the milometer and damage to the screws holding the fascia of the instrument panel on. The average annual mileage for a car around 10,000 miles; work out an expected range for the mileage based on the age of the car and its history (for instance, an ex-fleet car will probably have a much higher annual mileage, while a family's second car might have been used much less). If the milometer reading is a long way below your range, it might be time to get suspicious.

This checklist is not comprehensive: most of the specialist car magazines and websites produce extensive checklists for you to take with you when you are looking at a car. Details on your rights when buying a used car can be found on the Trading Standards web site.

Paying for your car

The best way to pay for a car is by using your own cash resources. Few people have the luxury of having enough spare cash to take this route, although most of us will be able to scrape together some moolah and not have to take out a loan for the full amount.

Taking out a loan to buy a car, especially through a dealer, can be very expensive. You'll often be able to get a cheaper loan from elsewhere. You could even considering extending your mortgage. Many people are using the equity in their homes because of the rapid rise in house prices in recent years. You could even consider changing to one of the new current account or offset mortgages, rather than extending your existing mortgage.

Mortgage rates are lower than any other form of debt but, of course, you have to be very sure you can continue to make the necessary repayments. You don't want to be booted out of your home just because you can keep up with your payments.

If you're taking out a separate loan check to see what penalties apply if you make any early repayments. Most of us do choose to repay loans early because we tend to choose a repayment amount we can comfortable afford and then use any spare cash we have to clear the debt as fast as possible. There's much more about choosing a loan in our Personal Loan centre.

Finally....

Buying a car should really be a simple financial transaction, but a car is much more than a box with four wheels that gets you from A to B. Cars are objects to fall in love with, to enjoy, to share with others; but never lose sight of the fact that a car is an asset that will consume money each year. Make sure that you buy the right car for the right reasons, and try to enjoy the process. Buying the car of your dreams can be as much fun as driving it!

For additional help on how to buy a car where better than our Buying a Car discussion board?

Useful resources
Top Gear
DVLA
RAC
AA
What Car?
Glass's Guide
Parker's Guide
Auto Trader

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